Andy Burnham has said he wants to get the “balance right” in the upcoming Budget for Brits squeezed by tax hikes.
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The Prime Minister said he was conscious that taxes had gone up in 2024 and 2025 as previous Chancellor Rachel Reeves battled to fix the mess the Tories left of the public finances.
But the PM and his new Chancellor John Healey face a darkening economic picture ahead of a high stakes Budget next month. Government borrowing rose more than expected to £18.3bn in August, as inflation hit its highest level in five months, driven by higher fuel prices.
Asked if the UK had the balance right between taxing wealth and income, Mr Burnham said: “We have two budgets in 2024 and 2025 and we have to be conscious of the extent to which we have raised revenue. And we have to make sure we get the balance right.” Pressed further, Mr Burnham said these were “matters for the Budget”.
The squeeze on the public finances means the Chancellor faces a raft of difficult choices to balance the books – tax rises, spending cuts or more government borrowing. Mr Burnham has committed to Labour’s manifesto pledge to protect working people from hikes to income tax, VAT and national insurance.
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This has triggered speculation he could target property, capital gains tax or business, such as the energy sector or banks.
Meanwhile, the PM rejected reports that the dire state of the economy had caught his team by surprise. He said: “It’s not the case that we were surprised when we came in – not least because I was in access talks and understood very clearly the position.
“The truth of the matter is that because of the situation in the Middle East, the position changed, and has changed over the time I’ve been in. That’s just the reality of the situation that we’re in.
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“And of course the message is that we want to see an end to the conflict as quickly as possible and we stand ready to play our part.”
It came as the PM stood by his warning that Britain should be less “in hock” to the bond markets, saying high levels of borrowing has left it “over-exposed” to global shocks.
Mr Burnham made the comments last year while he was still Greater Manchester Mayor, triggering criticism from Keir Starmer’s government and jitters from investors.
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In an interview with The New Statesman, he said: “I mean, the point about the bond markets, it holds – in that what I was saying was the country has left itself over-exposed.”
He accused Mr Starmer’s team of taking his comments out of context. He said: “They couldn’t understand why I was saying some of the things that I was saying… [They] didn’t know what to do with it, but they did what they always do, which is they pulled one line out of it and then framed that one line within their world, rather than the one that I was talking about.”
Andy Burnham Says Budget Must “Get the Balance Right” on Tax Hikes as Families Face Another Financial Squeeze
Prime Minister Andy Burnham has warned that the government must strike the right balance on taxation in its forthcoming Budget, acknowledging that households and businesses have already faced significant financial pressures after successive rounds of tax increases.
His comments come as Chancellor John Healey prepares a high-stakes Budget against a difficult economic backdrop, with rising borrowing costs, persistent inflationary pressures and uncertainty in international markets creating fresh challenges for the government.
Burnham has stressed that ministers must remain conscious of the cumulative impact of previous tax decisions while ensuring that public finances remain sustainable. His remarks have fuelled speculation about whether the government will seek additional revenue from wealth, property, capital gains or businesses rather than imposing further direct tax increases on working people.
The debate highlights one of the government’s most difficult political choices: how to fund public services and manage national debt without placing additional pressure on families already struggling with the cost of living.
Burnham warns against ignoring the burden of previous tax rises
Burnham acknowledged that the government had already raised substantial revenue through the Budgets delivered in 2024 and 2025. He argued that ministers must take account of those decisions when considering the next stage of fiscal policy.
“We have two budgets in 2024 and 2025 and we have to be conscious of the extent to which we have raised revenue,” he said. “And we have to make sure we get the balance right.”
The prime minister’s comments were significant because they recognised the political and economic limits of relying repeatedly on higher taxation to address the government’s financial challenges.
For households, tax increases can reduce disposable income and leave less money available for food, housing, transport and savings. For employers, higher taxes can increase the cost of hiring staff, potentially affecting recruitment decisions, wage growth and investment.
However, the government also faces pressure to maintain essential public services and meet its financial commitments. Ministers must therefore weigh the effects of taxation against the consequences of reducing expenditure or increasing borrowing.
Burnham has maintained Labour’s manifesto commitment not to increase income tax, VAT or employee National Insurance for working people. That commitment narrows the government’s options and increases the importance of decisions about other sources of revenue.
The prime minister’s message was that the Budget must recognise the pressures facing taxpayers while addressing the country’s wider economic position.
Why the Chancellor faces difficult decisions
Chancellor John Healey faces a complicated task as he prepares the government’s next Budget.
The public finances have come under pressure from higher borrowing, debt-servicing costs and weaker-than-hoped economic conditions. At the same time, households remain sensitive to price increases after several years of financial uncertainty.
Government borrowing rose to £18.3 billion in August 2026, according to figures cited in reporting on the Budget debate. Inflation also increased, driven partly by higher fuel prices and international developments.
The situation in the Middle East has added to uncertainty surrounding energy markets and the wider economic outlook. Higher energy prices can feed into transport, production and household bills, making it more difficult for the government to restore confidence.
Burnham has argued that the economic outlook changed as international events developed, rejecting the suggestion that his administration was simply surprised by the condition of the public finances.
The Chancellor must now determine how to meet the government’s fiscal objectives while avoiding measures that could further weaken economic activity.
There are three broad options available to any government facing such a challenge: raise taxes, reduce spending or borrow more. Each carries costs.
Tax increases can generate additional revenue but may weaken incentives to invest or employ workers. Spending reductions can help control borrowing but may affect public services and household support. Additional borrowing can provide flexibility in the short term, but it also increases future interest payments and can expose the country to changes in financial-market confidence.
Healey’s challenge is to find a combination that is financially credible and politically sustainable.
Could wealthy households face higher taxes?
Burnham’s comments have encouraged speculation that the government could look more closely at wealth rather than relying on further increases affecting income from employment.
Potential areas of debate include capital gains tax, property-related taxation and the treatment of particular business sectors. However, the prime minister has not confirmed that any specific tax will rise in the forthcoming Budget.
The distinction between taxing income and taxing wealth has become increasingly important in British politics.
Income tax is charged on earnings and certain other forms of income, while wealth can be held in property, investments and other assets. Changes to the taxation of those assets may affect people differently depending on their circumstances and how their wealth is structured.
Supporters of higher taxes on wealth argue that the burden should be distributed more fairly and that people with substantial assets may have greater capacity to contribute to public finances.
Critics warn that poorly designed taxes can discourage investment, complicate business ownership and create incentives for wealthy individuals to move assets or tax residency elsewhere.
Property taxation raises additional difficulties because an individual may own a valuable home without having a similarly high income available to pay a large new tax bill.
The government would need to consider these effects carefully before making changes. A measure that raises revenue on paper may produce less than expected if taxpayers alter their behaviour or if investment is affected.
The central question is not simply whether wealth should be taxed more heavily. It is how any changes would work, who would pay, how much revenue they would generate and what consequences they would have for the wider economy.
Labour’s promise to protect working people
Labour’s commitment not to raise income tax, VAT or employee National Insurance for working people has become a central part of its economic message.
The pledge reflects concern that many households have limited capacity to absorb additional costs. Families dealing with mortgage payments, rent, energy bills and everyday expenses may already feel that their incomes are under pressure.
However, the government’s promise does not remove the need to make difficult choices elsewhere in the tax system.
Employers’ National Insurance, for example, affects the cost of employing workers even though it is not the same as employee National Insurance. Changes to employer taxation can influence decisions about recruitment, wages and investment.
Business groups have argued that governments must consider the cumulative impact of taxation on companies, particularly those operating in competitive international markets.
If businesses face higher costs while demand remains weak, they may delay expansion or reduce hiring. On the other hand, companies also benefit from public infrastructure, education, transport and a skilled workforce, all of which require funding.
The government therefore needs to balance the demands of businesses with the needs of public services and the expectations of taxpayers.
Burnham’s insistence on getting the balance right reflects the difficulty of satisfying all these priorities simultaneously.
Economic growth remains the biggest challenge
Tax policy is only one part of Britain’s economic problem. The government also needs to improve productivity, encourage investment and create conditions in which businesses can expand.
Economic growth can increase tax revenues without requiring the government to raise tax rates. When more people are employed, wages rise sustainably and businesses generate stronger profits, public finances can improve through a broader tax base.
However, growth cannot be created simply by announcing an ambition. It depends on investment, infrastructure, skills, innovation and the confidence of households and employers.
The Organisation for Economic Co-operation and Development has forecast that UK economic growth will slow to around 1 per cent in 2027, according to recent reporting on the Budget. That outlook underlines the difficulty of relying on rapid economic expansion to resolve the government’s fiscal challenges.
A weaker economy can also create a difficult cycle. Slow growth limits revenue, increasing pressure on the government to raise taxes or reduce expenditure. Those measures can then affect consumer demand and investment if they are not carefully designed.
Ministers must therefore consider the interaction between taxation and growth rather than treating revenue collection as an isolated exercise.
A Budget that raises substantial sums but weakens business confidence could create new problems. Equally, a Budget that avoids difficult tax decisions without a credible plan for public finances could leave the government exposed to higher borrowing costs.
The international situation adds pressure
Burnham has pointed to the conflict in the Middle East as one of the factors affecting Britain’s financial position.
International instability can influence energy prices, shipping costs, investor confidence and the outlook for global trade. Even when a conflict takes place far from Britain, its economic consequences can reach households and businesses through higher costs.
For a government attempting to control inflation and restore fiscal stability, these developments make planning more difficult.
Energy prices are particularly important because they affect not only household bills but also the costs faced by manufacturers, transport companies and service providers. If higher energy costs persist, they can put renewed pressure on prices throughout the economy.
The government must also maintain the country’s ability to respond to emergencies and meet its international responsibilities. Those demands can compete with spending priorities at home.
Burnham has argued that the government wants to see the conflict end as quickly as possible and stands ready to play its part. His comments underline the connection between foreign policy and domestic economic conditions.
Nevertheless, international developments cannot explain every difficulty facing the public finances. The government must also address long-standing challenges involving productivity, public expenditure, debt and the structure of the tax system.
The political consequences of the Budget
The forthcoming Budget will be an important test of Burnham’s government.
If ministers announce substantial tax increases, they may face criticism that Labour is placing too much pressure on households and employers. If they avoid additional taxes, they will need to explain how public services will be funded and how the government intends to keep borrowing under control.
Opposition parties are likely to scrutinise any measures that appear inconsistent with Labour’s promises or that could affect economic confidence.
Conservatives may argue that the government should focus on spending restraint and a more business-friendly tax environment. Other political opponents may call for wealthier households and profitable businesses to contribute more.
The debate is unlikely to be resolved by a single announcement. The consequences of tax decisions often emerge over time as households change their spending, companies adjust investment plans and government revenues respond.
For Burnham, the political challenge is to demonstrate that the government has a coherent strategy rather than relying on short-term measures to manage immediate financial pressure.
That strategy will need to explain how taxation, public spending and economic growth fit together.
What “getting the balance right” really means
Burnham’s statement offers a broad principle rather than a detailed Budget plan. It acknowledges that the government must raise enough revenue to meet its commitments while recognising that taxpayers and businesses cannot be expected to absorb unlimited increases.
Turning that principle into policy will require difficult choices.
Ministers will need to assess which taxes can raise revenue fairly, which measures risk damaging investment and whether spending can be made more efficient without undermining essential services.
They will also need to explain how any new measures fit with Labour’s election promises and what the public can expect in return.
The government’s success should ultimately be judged by whether its policies improve economic stability, support sustainable growth and protect living standards. The number of taxes increased or avoided will be only one part of that assessment.
Burnham has made clear that he wants the Budget to recognise the scale of the tax burden already imposed in recent years. But the public finances remain under pressure, and his government cannot escape the need to make choices about revenue, spending and borrowing.
The Chancellor’s task is to turn the prime minister’s call for balance into a credible programme that businesses can plan around and households can understand.
For millions of people, the most important question will be whether the Budget makes everyday life more affordable while ensuring that Britain’s public finances remain on a sustainable path. That is the balance against which the government’s decisions will ultimately be measured.